Each bank can now have distribution tie up with as many as 9 life insurers, 9 general insurers and 9 health insurers
Insurance regulator IRDAI has now widely thrown open the bancassurance channel for insurers as part of its overall effort to increase insurance penetration in the country and achieve the long-term goal of ‘insurance for all’ by 2047, when the country will celebrate its golden jubilee of independence.
In less than a fortnight after its Board took the historic decision to increase tie up limit for intermediaries, the IRDAI has now notified the increased limits, paving the way for corporate agents (banks) to have distribution tie up with maximum of nine life insurers, nine general insurers and nine health insurers. Also, insurance marketing firms (IMF) can now enter into tie up with as many as six life, general and health insurers.
Earlier, corporate agents and IMFs were permitted to tie up with only 3 and 2 insurers, respectively, in each segment. Now, the latest IRDAI move to open the bancassurance floodgates is going to give customers wider choice and access to insurance plans, say industry observers. Also, smaller insurance organisations could now get an opportunity to partner with big banks, especially those who already have their captive insurance businesses. Banks, which had promoted their own insurance businesses, were hitherto not keen to engage with smaller insurance firms as they were focused only on pushing the products of their own insurance entities, said industry observers. Now with the further widening of the open architecture, large banks approach may change and be willing to partner with smaller and mid-size insurers also, they said.
Bancassurance is an insurance distribution model where insurance companies partner with banks to sell policies. Both the bank and the insurance company get to benefit from this arrangement. While the bank earns a commission from the insurance company, the insurer gains from the distribution network of the bank.
“In order to enable the policyholders/prospects to have wider choice and access to insurance through various distribution channels and facilitate the reach of insurance to the last mile, the maximum number of tie-ups for Corporate Agents (CA) and Insurance Marketing Firms (IMF) have been increased. Now, a CA can tie up with 9 insurers (earlier 3 insurers), and IMF can tie up with 6 insurers (earlier 2 insurers) in each line of business of life, general and health for distribution of their insurance products. The area of operation of IMF has also been expanded to cover entire state in which they are registered,” said IRDAI.